United Kingdom

In 2008 the United Kingdom accounted for over 10% of all venture capital investments in the OECD area, the second largest share after the United States (49%).

Total R&D intensity (1.8% of GDP in 2007) is slightly below the OECD average (1.9%). UK businesses finance only 47% of total R&D expenditures, against an average of 57% for G7 countries. In 2008 defense accounted for 24% of the government R&D, the third largest share in the OECD after the United States and France.

Over 1999-2008, the rate of R&D tax subsidies for large firms increased by 10 percentage points and become in line with the OECD. The rate for SMEs is higher than the OECD average.

The United Kingdom has a low number of patents per capita (27 per million inhabitants) compared to the G7 (48) and the OECD average (33).

Patents show a clear specialization of the UK research in health, environmental, bio and nanotechnologies. R&D expenditures by the pharmaceutical industry accounted for over 20% of the business sector R&D in 2006. Over 2001-06, the United Kingdom ranked second for its scientific articles in climate change and biodiversity and third in brain research and genomics.

The share of broadband subscribers (29% in 2008) is the highest among G7 countries.

Competing in the World Economy

The United Kingdom has the largest value of foreign direct investment (FDI) relative to GDP among G7 countries. FDI inflows more than doubled in the first quarter of 2009, back to the same level as before the crisis. In the same quarter, FDI flows to the other G7 countries dropped by 63%.

The trade balance is positive and above the OECD average for both high and medium-high technology goods but it is negative for ICT goods (-3% of total trade).

The United Kingdom registered the highest rate of productivity growth (2.4% a year) among G7 countries over 1998-2008.

Over 30% of all UK business sells goods or services over the Internet, the highest penetration among G7 countries. The share of e-commerce sales in total turnover is also among the highest in the OECD area.

Connecting to Global Research

The United Kingdom shows a high degree of international cooperation in innovation. The share of UK patents with a foreign co-inventor (24%) increased by more than 5 percentage points from 1996 to 2006 to become higher than the OECD average (22%).

In 2007 R&D funds from abroad accounted for over 23% of business R&D in the United Kingdom, the second largest share in the OECD after Australia. The technology balance of payment also shows the largest surplus among G7 countries.

The United Kingdom hosted the second largest foreign doctoral population (38 000), after the United States (92 000).

Investing in the Knowledge Economy

In 2006 over 2% of the relevant population in the United Kingdom obtained a doctoral degree, against an OECD average of 1.3%. The share of doctoral graduates in scientific areas (31%) was above the OECD average (25%).

Graduation rates at university level are lower than the OECD average but over 35% of employed in the United Kingdom have a tertiary-level education.